Consultation Paper on Small Claims Tribunal Ordinance (Cap. 338) - Cost
CONSULTANTS PAPER ON SMALL CLAIMS TRIBUNAL
ORDINANCE (CAP.338) – COSTS
- Further to our paper of 15th September, 2000, we have
been asked to comment on the additional proposal put forward by
the Administration to limit a party’s entitlement to costs in the
District Court or the Court of First Instance where the proceedings
have been transferred from the Small Claim Tribunal pursuant to
section 7 of the Small Claims Tribunal Ordinance.
- The proposal has been put forward by the Administration on the
ground that to allow costs in the District Court or the Court of
First Instance where the claim is within the small claims jurisdiction
(i.e., less than $50,000) would be contrary to the policy behind
the Small Claims Tribunal Ordinance which is to protect litigants
with small claims against potentially disproportionate legal costs.
- The Administration has proposed that a party’s entitlement to costs
in cases transferred from the Small Claims Tribunal to the District
Court or the Court of First Instance should be limited to the same
kind of costs as are recoverable in the Small Claims Tribunal itself.
- Whilst we note the Administration’s desire to protect litigants
in small claims against potentially disproportionate costs, we are
concerned that in preventing the successful party from recovering
his costs where the proceedings have been transferred to the District
Court or the Court of First Instance merely on the ground that the
monetary value of his claim is small may give rise to serious injustice.
- The starting position is that litigants have the right to have
their disputes resolved in a court. Procedural limitations can only
be justified insofar as they do not unduly impede access to justice.
Under the existing framework of the Small Claims Tribunal Ordinance,
the Small Claims Tribunal offers a relatively informal and inexpensive
forum for the adjudication of small claims. Costs are kept low because
legal representation is excluded and litigants are expected to appear
in person. The no-costs rule is a natural corollary of the exclusion
of legal representation.
- However, it is recognised that the Small Claims Tribunal is ill-suited
to dealing with complex cases involving difficult issues of law
and that is why section 7 of the Ordinance provides for transfers
to the District Court of the Court of First Instance. By their very
nature, such cases are likely to require legal representation; the
costs of which for one of the parties alone can easily exceed the
amount of the claim (max. $50,000). Given that it is unrealistic
to expect litigants to be able properly to prosecute or defend these
cases in person, if the successful plaintiff were not allowed to
recover his costs, his right of action would be worthless to him.
There is even less justification for forcing a successful defendant
to bear his own costs of defending the claim (the bringing of which
is not of his own choosing).
- Whilst it may be argued that parties should be discouraged from
litigating small claims at disproportionately large costs, we do
not believe that procedural impediments should be placed in the
path of potential litigants. As a matter of principle, litigants
(however small may be the monetary value of their claims) should
not be pressured into abandoning their claims (or defences) simply
because complex legal issues are involved.
- In the light of the above, we believe that the award of costs
in small claims proceedings transferred to the District Court or
the Court of First Instance, like the award of costs on appeal,
is necessary for the proper administration of justice. In
this regard, we also believe that the policy behind the Small Claims
Tribunal Ordinance is only to cut down on unnecessary costs and
it does not require an extension of the no-costs rule of the Small
Claims Tribunal to proceedings transferred to the District Court
or the Court of First Instance.
- If changes have to be made, we would recommend extending legal
aid to cover small claims proceedings in the District Court or the
Court of First Instance, subject to means-testing.
Dated 7 February 2001
Hong Kong Bar Association